Lynn Discusses CNAS Report on Integrating New Tech into the Defense Industrial Base

LYNN DISCUSSES CNAS REPORT ON INTEGRATING NEW TECH INTO THE DEFENSE INDUSTRIAL BASE

December 14, 2016

The Center for a New American Security (CNAS) Technology and National Security Program has released a new report, co-chaired by DRS Technologies and Leonardo North America CEO Bill Lynn, laying out a fundamentally new strategic approach for the Department of Defense for generating technological advantage. The report, “Future Foundry: A New Strategic Approach to Military-Technical Advantage,” makes the case that the Pentagon must go beyond changing acquisition policy. Rather, it needs to shift the Department’s underlying technology strategy to better align with the modern marketplace for innovation and the United States’ threat environment.

This report is the culmination of the CNAS Future Foundry project. The Future Foundry project seeks to develop and articulate a positive, 21st-century vision for sustainable collaboration between the Department of Defense and its partners from multiple industry sectors. The project builds on two years of research by the CNAS team describing the challenges faced by the global defense industry in “Creative Disruption” and considering DoD’s attempts to maintain military-technical superiority in “Beyond Offset.”

The report’s executive summary below:

In June 2014, the Center for a New American Security released “Creative Disruption: Technology, Strategy and the Future of the Global Defense Industry.” The paper argued that the United States military risks losing its technological advantage if the Department of Defense and its industry partners do not adapt to widely recognized strategic, technological, and business trends.

In the two years following that paper’s release, senior leaders in the DoD have sought to arrest the decline of U.S. technological superiority. Secretary of Defense Ash Carter has launched high-profile innovation efforts, reaching out to Silicon Valley and creating the Defense Innovation Unit Experimental (DIUx) and Defense Innovation Advisory Board. Deputy Secretary of Defense Robert Work has championed the Third Offset Strategy, which seeks to maintain the United States’ ability to project power against adversaries armed with significant precision munitions capabilities. It is apparent that senior leaders understand the challenges facing the DoD, but their efforts have yet to address the systemic issues outlined in “Creative Disruption.” Empowering new organizations such as the DIUx and the Strategic Capabilities Office (SCO) is a positive step, but it is ultimately insufficient for the DoD to innovate exclusively outside its core bureaucracy or attempt to force new technology efforts through an outdated system.

The Department of Defense must recognize that its military-technical challenges are a matter of strategy – the fundamental approach the department takes to generating technological advantage – not simply of acquisition policy. The DoD’s acquisition system requires constant improvement but functions reasonably well for its intended purpose and has improved in recent years, as reported by Under Secretary of Defense for Acquisition, Technology and Logistics Frank Kendall in October 2016.

Accordingly, the DoD must develop and implement a new strategic approach to generate and maintain technological superiority – one that fundamentally shifts the basis of the DoD’s advantage by creating an elegant alignment among the nation’s strategic needs, available technologies, and the various business models through which the DoD develops and fields military capabilities. The source of that future advantage cannot depend on DoD investments alone, but must encompass the United States’ total technological capability, including civilian talent and resources.

The impending presidential transition offers the new secretary of defense a rare window to capitalize on opportunities created by current leaders in the Pentagon and Congress. A new strategic approach to military-technical advantage must be at the top of the next secretary’s agenda, and not simply as an end in itself or as a method to address rising costs and fragility in the defense industrial base. The next secretary must communicate a new vision within his or her first 100 days in office, and convince stakeholders from Congress, industry, and inside the DoD to take action in line with that strategic approach.

The DoD plays critical policy, intelligence, and trade roles across the government, but ultimately, it is the only department responsible for developing the military capability that underpins the nation’s foreign policy options. The erosion of U.S. military-technical advantages increases military risk, weakens the deterrent value of traditional capabilities, and undermines the DoD’s ability to generate nuanced military options to address the growing range of policy contingencies faced by the nation. The DoD must ensure it can support the widest possible range of policy choices for the commander in chief despite technological advances fielded by adversaries.

The DoD therefore needs to:

Articulate a new strategic approach to military-technical advantage – an optionality strategy – in which the goal is to expand the range of military and technical options available via a diverse portfolio of capabilities and concepts.

Use this new strategic approach to drive institutional and policy reforms that ensure DoD component organizations are able to field the full range of technologies required for military advantage.

Develop associated industry policy to align incentives and collaborate with a wider range of industry partners in a more nuanced manner that yields both military and business benefits.

Under an optionality strategy, the DoD would build a diverse portfolio of capability options, with each investment designed to mitigate risks in other areas of the portfolio, and manage them dynamically to reflect changing threats and new technological opportunities. These technology investments would be matched by diverse concepts of operation (CONOPs). The resulting capabilities would leverage the diversity and flexibility of this portfolio to impose intelligence and innovation costs on the nation’s adversaries. The options provided in this portfolio would also allow the United States to rapidly respond to enemies’ and competitors’ adaptations.

An optionality strategy would shift the basis of technological competition from the features of specific weapons systems to the military’s access to centers of industry and innovation and – more importantly – to the human capital of concept developers and military commanders. By widening the basis for technical competition and seeking to achieve advantage in aggregate, the DoD can exploit advantages, particularly human, in which the United States is expected to remain dominant for the foreseeable future.

The DoD’s industry partners are integral to any new strategic approach to increase the department’s technological edge. To facilitate more effective collaboration with industry, the DoD needs to adopt nuanced policy that recognizes it does business with four distinct industry segments, which produce:

Military unique systems with constrained competition – such as aircraft carriers, submarines, and nuclear weapons.

For the traditional defense industry, an optionality strategy would provide more opportunities to innovate and to focus on rapidly fielding new technologies, thereby increasing investment, competition, and industry vitality. In parallel, a new defense industry sub-segment would emerge, based on policies and processes that support the development of military adapted commercial technology. This sub-segment could see vigorous competition between traditional American defense industry, global defense industries, commercial businesses, and startups. Such businesses could bring new technologies to market, creating business value while, more importantly, generating technological advantages of the U.S. military.

An optionality strategy need not increase the DoD’s top line budget if it is implemented effectively. Under such a strategy, the DoD could leverage the almost $2 trillion of global commercial research and development (R&D) more effectively, mitigate the risks of overruns and program cancellations (estimated from $58 to $116 billion between 1997 and 2015, not including classified programs), and better manage its operational and maintenance costs. Above all, this strategy will help the DoD avoid the incalculable costs of losing the nation’s military-technical advantage.

The United States possesses intellectual, financial, and institutional advantages sufficient to maintain its military-technical superiority, even in a world of democratized technology and rising competitors. The ability of the DoD and its industry partners to adapt to change will be the difference between success and failure. Unfortunately, recent history suggests that such change is unlikely. In the absence of institutional adaptation, the United States’ historic military advantages will continue to decline, as will the industrial capability required to reverse such a trend. To allow such an outcome to occur due to a lack of leadership or failure to implement new ideas would be irresponsible.